Research isn't, research and development is. (research can be pretty expensive, too).

And we do have exactly the industry that we do - that is, everybody chasing blockbusters, the glut of "me-too" drugs, the paltry number of drugs actually making it to market - because it is prohibitively expensive.

The current model seems to be for giant pharma companies to more or less indiscriminately buy up small biotechs, hoping to randomly strike gold with one of them. This does not lead to a very efficient system: I think we are up to $100+ billion spent on research annually ($70B from industry, $30B from the NIH) for a grand total of 26 new drugs approved last year.

Spread that cost to the CDC, NIH, the WHO, various teaching hospitals, universities, pharmacos, foreign medical systems... and yes, research gets cheap per study.

The CDC and WHO don't fund any significant amount of research (and even if they did, the CDC budget is only something like $8 billion, WHO is under a billion), the NIH is supposed to primarily support basic research, not development (not to mention funding those universities you mentioned).

FoldIT is not only closed source software, but also closed as an application. It's the best application to remodel and fix up protein structures out there; yet it is not available to use it on your own protein structures.

The groups behind it are research groups and of course with it being their own 'product' they are not forced to sell it or give it away, but they are still sitting on it, although many molecular biologists could benefit from its availability as a professional remodeling tool. When emailing the developing group about possibilites to use it for redesigning parts of my own protein structure and paying for the program, I was only told that there are no plans to allow that. In my opinion this is bad science, because there is no way to duplicate any of it, without a massive development effort.

Partly yes, but partly for the opposite reason as well: lots of entities makes it possible to play shell games. There are a lot of biochem profs who have biotech companies on the side, and you might not be surprised that what often happens is that 90% of the research is done in academia on grant funding, and then the last 10% migrates to their startup, which patents the result.